Earnings Preview: Novellus

Feb. 2.12 | About: Novellus Systems, (NVLS-OLD)

Novellus (NASDAQ:NVLS-OLD) is expected to report Q4 earnings after the market close on Thursday, February 2, with a conference call scheduled for 4:30 pm ET.


The consensus estimate is 47c for EPS and $277.24M for revenue, according to First Call. Consistent with recent reports from KLA-Tencor (NASDAQ:KLAC), TE Connectivity (NYSE:TEL), Lam Research (NASDAQ:LRCX), and ASML Holding (NASDAQ:ASML), most analysts expect strong Q4 results from Novellus and strong Q1 bookings guidance. Company guidance from the Dec. 5 mid-quarter update was for Q4 GAAP EPS 42c-46c on revenue of $260M-$290M. Bookings for Q4 were guided to be up 20%-30%, with shipments ranging from $270M-$300M. Novellus saw strength towards the NAND side of the business, and said that foundry had bounced back. The company said 2012 should be a "good year" for NAND.

Analyst Views

Deutsche Bank forecasts Q4 EPS/revenues of 48c/$285M, slightly above consensus. The firm expects Q4 shipments to be $280M, closer to the midpoint of guidance of $270M-300M. Deutsche believes the depreciation-related tax incentive will result in a pull-in of shipments from future quarters. Deutsche expect s Q4 gross margin of 46%, in-line with consensus and within guidance of 45%-47%, but below Q3's 48%. Looking ahead, Deutsche recently raised its Q1 EPS/revenue estimates to 63c/$305M from 50c/$273M, compared to consensus of 54c/$287.67M. The firm expects management to guide above consensus as a strong rebound in orders at the end of 2011 translates into revenue in Q1.